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The Bad and the Good of the Wal-Mart ACFTU Collective Agreement

May 18, 2009

The attached document is a translation of the collective agreement in effect between one of the individual unionized Wal-Mart stores in China and the responsible local trade union committee. It represents the template agreement that has been followed by all of the unionized Wal-Mart stores in China since July 2008.

To put this agreement in global perspective, there is not a single collective agreement at any Wal-Mart store in the USA, while in Canada the only existing agreement covering 180 employees at Ste Hyacinthe, Quebec was imposed by first contract arbitration in April this year after a struggle lasting four years (in the province of Quebec if the parties cannot reach agreement on a first collective bargaining agreement following initial union recognition, an arbitrator has the right to decide on the terms of the initial agreement). A previous union agreement covered employees of the tire and lubrication department at a Wal-Mart store in Gatineau, Quebec, but Wal-Mart closed the department rather than agree to the modest wage schedule determined by the arbitrator. Although both the Chinese and the Canadian agreements leave much to be desired and must be improved, they are significant as historical breakthroughs at a fiercely anti-union company. As the largest company in the Fortune 500, with a vast network of suppliers producing goods for the entire world and now over a hundred Wal-Mart retail stores in China, Wal-Mart was able to largely dictate the terms of these first contracts. Union struggles to improve them may set the tone for trade unionism in China and globally for years to come.

The first batch of more than a dozen store unions was set up by the ACFTU underground after genuine democratic trade union committee elections before 16 August 2006. But these slid back over time into management’s hands as the large of the majority of other Wal-Mart union branches were formed under management after the ACFTU agreed to let management staff sit on the union branch committees (see previous CLNT Issue May 2008 http://www.clntranslations.org/article/30/draft). Since then for two years the ACFTU had not asked Wal-Mart to sign any collective agreement. We were told in 2007 by some union cadres that without instructions from on high, local unions would not take any initiative.

The green light finally came. In July 2008 it was suddenly announced that Wal-Mart’s first collective contract in China was signed at the outlet in Shenyang, Liaoning Province. Soon thereafter a contract was signed covering 16 stores in Shenzhen. These contracts were the template agreements that Wal-Mart management insisted be extended without substantial changes to the other Wal-Mart outlets in China. Although the national ACFTU asserted that its agreement with Wal-Mart provided only a general bargaining framework, the details of which had to be passed by the workplace staff and workers representative congress as stipulated by the law, they were signed without further negotiations. After all, most trade union committees were staffed by human resource managers or other managers.

The only resistance Wal-Mart encountered was from the elected trade union chair, Gao Haitao, of the Nanchang City Bayi Wal-Mart store. For two years Gao struggled with Wal-Mart management over a whole number of issue. Details were covered by CLNT’s May 2008 issue (see http://www.clntranslations.org/article/30/draft). When the contract was imposed by Wal-Mart on his union, Gao raised a number of issues over matters of principles and specifics such as health and safety, overtime, wage determination and the fact that so many articles allowed management to adjust work conditions without consultation with the union. The Nanchang Bayi Wal-Mart refused to accept any changes and instead convened a so-called “staff and workers congress” to bypass the union and “agree” to the draft agreement. Gao refused to sign and on 8 September 2008 Wal-Mart simply had a branch union chairman under its control at another Nanchang store sign “on behalf of” the recalcitrant branch at the Bayi store. Gao resigned in protest (see http://www.clntranslations.org/article/34/promising-wal-mart-trade-union-chair-resigns-over-collective-contract-negotiations ).

While both the ACFTU and Wal-Mart expressed their satisfaction with success of the “collective consultation”, which had been promoted by the Chinese government, it is obvious that Wal-Mart employees were neither involved in the negotiations process nor were they generally aware of the terms of the agreements.

Not surprisingly for a first agreement, most of the contract language favors management, in particular when the ACFTU has had little experience in drawing up agreements. Perhaps the most difficult terms of the current agreement for the union to overcome in China are its extraordinary length it covers (five years when no improvements can be made except for the annual consultation on the increase in total wages), and the absence of any job classification system or salary schedule. Other problems may be seen in the missing provisions that are standard in most collective agreements around the world in all sectors: notably the absence of any procedure for handling individual employee grievances or resolving collective disputes over the interpretation of the agreement. Presumably these would have to be handled by China’s overburdened legal system.

In August 2007 the Canadian Auto Workers (CAW) prepared a presentation in English and Chinese for a visiting delegation from the Beijing Municipal Workers Federation. This presentation summarized the essential points of the CAW’s negotiated contract with Viva Magnetic. Including:
• Union Recognition
• Communications Committee
• Discipline Procedure
• Grievance and Arbitration Procedure to Resolve Disputes
• Worker Health and Safety including a Joint Occupational
Health and Safety Committee and the Right to Refuse
Unsafe Work
• Hours of Work Regulations
• Overtime Pay (no involuntary overtime)
• Vacation and Holiday Schedules
• Medical Insurance Benefits
• Leaves of Absence
• Seniority Rights
• Promotions based on qualifications and seniority
• Union to be consulted on closings or major layoffs
• Wage Schedule
• Duration of 3 years

While it would be completely unrealistic to expect any initial Wal-Mart labor agreement in China or in Canada to match the standard of CAW’s agreement with Viva Magnetic, it does provide a realistic long-term project for incremental improvement through years of struggle.

CLNT has invited a trade unionist experienced in multinational international agreements to comment specifically on the terms of this contract. In addition to the general comments above, comments on some specific items in the Chinese Wal-Mart contract are included as footnotes to the English translation.

The content aside, the agreement has not been fully implemented based on information we got from six Wal-Mart stores. The most important gain for the workers – the 8 percent yearly pay raise – has not been realized nation-wide as far as we are aware. Ordinary workers had no access to the agreement and were not clear about the content. At best in some stores management announced that the average 8 percent pay raise will take effect in June every year for ordinary workers, and in January for management staff. The agreement does not specify an effective starting time, nor do these two time periods exist. In other words ordinary workers will not see any pay raise, if at all, for almost a year. Since the agreement does not have a salary schedule, individual workers have no way of knowing the exact percent of pay increase they will be getting since the 8 percent rise is an average increase for all employees. Furthermore, the timing announced for the increase seems to have been picked by Wal-Mart with the intent of obfuscating the annual pay rise. Since in the past annual wage increases for ordinary workers whose wages are closely tied to the annual minimum wage usually shows up in end-of-July pay packages, it will be difficult for them to confirm whether any of that increase can be attributed to the 8 percent as stated in the agreement. At the time of writing, no ordinary Wal-Mart worker has received a pay rise yet.

Yet one should never discount the value of having formal union representation and even an inadequate initial collective agreement at Wal-Mart. Unexpectedly the new union branches and the CBA became useful tools for the management staff. Managers understandably have not been interested in the setting up of the union branches and the CBA. If they have joined to become union members probably it was because Wal-Mart had asked them to in an effort to increase the size of management staff in the union. Yet, when Wal-Mart began laying off management staff in April they sought help from the union.

On 10 April Wal-Mart announced a plan to reshuffle many of its mid-level managers by transfers, demotions, or buyouts to reduce labor costs in stores all over China. In Changchun City of Jilin Province, the managers affected by the downsizing went to the city union for help. The Changchun municipal labor federation demanded that Wal-Mart general managers meet with the mid-level managers to consult with them on the proposed changes. The Shenzhen municipal labor federation held a meeting on 22 April to discuss this issue with the chairs of the 16 Wal-Mart trade union branches in the city where Wal-Mart’s Chinese headquarters is located. Wal-Mart China has been forced to modify its plan (http://www.chinadaily.com.cn/cndy/2009-04/15/content_7677753.htm). While it is not surprising that the union is initially more responsive to the concerns of mid-level managers who dominate the ranks of enterprise union representatives, this could provide a useful precedent for union intervention on behalf of ordinary workers whose turn to be down-sized is expected to come soon in the wake of the managers.